It is being recognized that the increasing cost of energy is not a temporary or cyclical phenomenon but a continuing one. While there may be fluctuations from time to time, it is a fact that non-renewable energy sources are being depleted at a rapid rate. As the cheaper energy sources disappear, more expensive sources will take their place, continuing the cost increases to the consumer and also to the energy suppliers, i.e., the utilities. It is therefore no longer logical to use the kinds of rate structures which have been customary in which a user was "rewarded" for volume use of energy In the case of electrical energy, for example, if there are large fluctuations of energy use the supplying utility must either build enough generating capacity to supply the peak kilowatt energy (KWE) demands or must buy energy from another utility. Because those demand peaks often occur at the same time in nearby utility networks it is not always possible to buy it and, even if it is available, it is always more costly.
As the average level of energy usage increases, the peaks generally increase more, thus placing the utilities in the position of having to make large capital investments for generating plants. Since it is highly desirable to avoid this, it follows that steps need be taken to even out the peaks and valleys of demand, particularly to decrease energy usage during peak intervals. It is, of course, also quite important to maximize the efficiency of each HVAC system in the network.
Residential electrical energy usage is a major contributor to the peak demand in many areas. Although one residence considered alone may not have a meaningful impact on the KWE demand curves, it is well established that residential users follow certain patterns which are statistically very significant and that those patterns in any given area have major effect on KWE demand in that area. In an effort to make use of this knowledge, utilities in many regions have instituted a rate structure which is based on the maximum energy usage by a residence during sample intervals spaced through the peak demand times. A common technique is to monitor the usage for one-half hour intervals between each hour and half hour (e.g., 10:00 and 10:30) during the peak usage time of, e.g., 9 a.m. and 9 p.m. While this is a step in the right direction, it is difficult for most homeowners to make effective use of such a rate structure because there is no practical way for them to know when power is being used by their residences or in what amounts.